Value of supply of Specified Services in GST regime


The value of supply of goods and services is determined by Section 15 of the Central Goods and Services Tax ('CGST Act') in GST regime. However, for various specified services, there are specific provisions provided in GST Law to determine the value of supply. These provisions have been imported from the service tax regime. The specified services and provisions for the same have been given hereunder:

• Value of supply in case of lottery, betting, gambling and horse racing
• Value of service of purchase or sale of foreign currency including money changing
• Value of service of booking of tickets for air travel by an air travel agent
• Value of service in relation to life insurance business
• Value of second hand goods - Margin Scheme

a) Value of supply in case of lottery, betting, gambling and horse racing: (Rule 31A)


Supply

Value

Supply of lottery run by State Governments

Higher of two amounts

i. 100/112 of the face value of ticket OR
ii. 100/112 of the price as notified in the Official Gazette by the organizing State.

Supply of lottery authorized by State Governments

Higher of two amounts

i. 100/128 of the face value of ticket OR
ii. 100/128 of the price as notified in the Official Gazette by the organizing State.

Supply of actionable claim in the form of chance to win in betting, gambling or horse racing in a race club

100% of the face value of the bet or the amount paid into the totalisator.


b) Value of service of purchase or sale of foreign currency including money changing: [Rule 32(i)]

The value of service in relation to sale or purchase of foreign currency including money changing can be determined by either of the two methods-

Method-1

Case 1: Case where one of the currency exchanged in Indian Currency

The value shall be equal to the difference in the buying rate or the selling rate and the Reserve Bank of India reference rate for that currency at that time, multiplied by the total units of currency.

However, where the Reserve Bank of India reference rate for a currency is not available, the value shall be one per cent of the gross amount of Indian Rupees provided/ received by the person changing the money.

Case 2: Transaction where neither of the currency is exchanged in Indian Currency

The value shall be equal to one percent of the lesser of the two amounts the person changing the money would have received by converting any of the two currencies (at RBI reference rate) into Indian Rupee.

Method-2

The person supplying the service may also opt the following option, however once opted, such option shall not be withdrawn during the remaining part of that financial year.

Currency Exchanged

Value of Supply

Upto Rs. 100000

i. 1% of the gross amount of currency exchanged
ii. Rs. 250, whichever is higher

Exceeding Rs. 100000 but upto Rs. 1000000

Rs. 1000 and 0.5% of the gross amount of currency exchanged.

Exceeding 1000000

i. 5500 + 0.1% of the (gross amount of currency exchanged - Rs.100000)
ii. Rs. 60000, whichever is lower


c) Value of service of booking of tickets for air travel by an air travel agent [Rule 32(ii)]

Value of services in relation of tickets for travel by air provided by an air travel agent shall be 5% of the basic fare in the case of domestic bookings and 10% of the basic fare in the case of international bookings.

d) Value of service in relation to life insurance business [Rule 32(iii)]

I. If investment allocation amount is intimated to the policy holder at the time of collection of premium, then taxable value is gross premium charged less amount allocated for investment/saving.

II. Single Premium annuity policies: Taxable value is 10% of single premium charged.

III. Other Cases: Taxable value is 25% of the premium charged in the first year and 12.5% of the premium charged in subsequent years.

e) Value of second hand goods - Margin Scheme: [Rule 32(iv)]

A person is engaged in dealing in buying and selling of second hand goods i.e., used goods and where no input tax credit has been availed on the purchase of such goods, then the value of supply shall be the difference between the selling price and the purchase price.

However, for the aforesaid supplies, the supplier has only given the option to choose and thus, it shall be the decision of supplier to either determine the value of abovementioned supplies from Section 15 of CGST Act or from the rules described above.

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Shivam Goyal 
on 11 January 2019
Published in GST
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